If Two Assets Have a Zero Correlation, Their Returns Will

question 2

Multiple Choice

If two assets have a zero correlation, their returns will:

• A)always move in the same direction by the same amount.
• B)always move in the same direction but not necessarily by the same amount.
• C)move randomly and independently of each other.
• D)always move in opposite directions but not necessarily by the same amount.
• E)always move in opposite directions by the same amount.

---

Definitions:

Conclusion

The end or finish of an event, process, or text, often summarizing findings or results.

Power Curve

A graphical representation used in statistics to show the probability of rejecting the null hypothesis at various effect sizes.

Power of the Test

The probability that a statistical test will correctly reject a false null hypothesis, indicating the test's ability to detect an effect when there is one.

Confidence Interval Estimate

A range of values derived from sample statistics that is likely to contain the value of an unknown population parameter, with a certain level of confidence.